Alabama Residential Report: YTD Sales up 7.6%; 80% of local markets show improvement from 2011

View full sizeAlabama home sales in August were up 6.5% from prior year. YTD Sales are up 7.6% from 2011. Infograph courtesy of ACRE. All rights reserved.

After a lackluster July, statewide residential sales show a marked improvement across the board in August.Alabama statewide residential sales during August were 6.5 percent higher than the same period in 2011. Year-to-date (YTD) through August, sales are up 7.6 percent from 2011. Early indications suggest that returning the statewide school start date to much later in August is not only good for tourism, but also our state's real estate industry.

Supply: The statewide housing inventory in August was 33,862 units, a decrease of 8.3 percent from August 2011 and 17.2 percent below the month of August's peak in 2010 (40,906 units).

There were 8.8 months of housing supply (6 months considered equilibrium) in August 2012 versus 10.2 months of supply in August 2011, a healthy decline of 14.0 percent.

August inventory in Alabama experienced a 1.3 percent decrease when compared to the prior month. This trend is consistent with historical data indicating that August inventory on average (’07-’11) traditionally decreases from the month of July by 1.3 percent.

Demand: In August, Alabama residential trends were consistent with the US market which showed an increase of 7.8 percent from the prior year (August 2011), according to the National Association of REALTORS (NAR). NAR also reported that the South region sales were up 11.1 percent from last August. Investors accounted for 18 percent of nationwide sales while 27 percent were all-cash sales and 31 percent were first-time home buyers (40% in typical market).

August statewide residential sales improved 7.2 percent from the prior month. This movement favorably contrast historical data that indicates that August sales, on average (’07-’11), decrease from the month of July by 11.4 percent. In comparison, US sales rose 9.3 percent from last month while the South region also rose 7.3 percent from the prior month (July 2012).

Pricing: The statewide median selling price in August was $127,383, an increase of 3.2 percent from last August and the sixth increase in the last eleven months. This figure also represents an increase of 1.6 percent when compared to the prior month. This is a favorable contrast from historical data ('07-'11) that reflects an August median selling price that traditionally decreases from the month of July by 2.6 percent. Nationally, NAR says that distressed homes – foreclosures and short sales sold at deep discounts – accounted for 22 percent of July sales (12 percent were foreclosures and 10 percent were short sales), compared with 24 percent in July and 29 percent in June 2011. This is a favorable trend for the overall market. Foreclosures typically sold for an average 19 percent below market price in July, while short sales were discounted 13 percent.

Local Results: 15 out of the 25 local reporting associations (60% - this is up from 40% in July) reflect sales gains from the prior year (August'11) while 17 associations (68% - up from 40% in July) reported sales gains from last month. Year-to-date, sales in metro markets (up 11% from last year) have outperformed both rural (up 5%) and midsize areas (up 2%). All 5 major metro areas representing 70% of Alabama sales have positive YTD year-over-year growth rates: Tuscaloosa (up 2%), Huntsville (up 13%), Birmingham (up 14%), Mobile (up 4%) and Montgomery (up 13%).

As the market transitions through the third quarter of 2012, statistical volatility is anticipated. Real estate sales are seasonal and third quarter sales typically begin to gradually decline from the prior "sales peak" second quarter. Through August, eighty percent (20 of 25) of the local housing markets have experienced year-to-date (ytd) sales growth from 2011 and that is welcome news for Alabama consumers as well our state's real estate community. On the other hand, continued anemic US job creation/economic growth, strict underwriting standards, uncertainty of election (ie 2013 tax policy) and the global economic slowdown top the list of concerns that market watchers cite as elements that could possibly impact the housing recovery.